In the Basic 45° Line Model, What Is the Effect

question 95

Multiple Choice

In the basic 45° line model, what is the effect of a decrease in the price level?

• A)The expenditure line will shift downward.
• B)The expenditure line will shift upward.
• C)There will be movement to the left on the expenditure line.
• D)There will be movement to the right on the expenditure line.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency.

Discount Rate

In discounted cash flow analysis, it's the rate employed to calculate the present value of anticipated cash flows.

Net Present Value

The discrepancy between the current value of incoming cash and the current value of outgoing cash throughout a given timeframe.

Cash Savings

The amount of money a company or individual keeps on hand that is not invested, spent, or used in paying off debts.